(Reuters) -Morgan Stanley’s first-quarter profit fell as its mainstay investment banking business remained under pressure due to a prolonged slump in dealmaking.
Wall Street’s investment banks have suffered the most from a downturn in mergers and acquisitions as investors shunned risky bets against the backdrop of volatile markets and rapidly rising interest rates.
The turmoil has also brought initial public offerings to a virtual halt as startups put off market debuts until investor sentiment improves.
The downswing in investment banking activity, which forms the core of the bank’s business, dragged its total revenue down nearly 2% to $14.5 billion in the quarter.
The bank’s closest rival Goldman Sachs Group Inc also reported a slump in its investment banking unit on Tuesday, as dealmaking and bond trading slumped and it lost money on the sale of some assets in its consumer business.
Results from Morgan Stanley round out a choppy reporting season for Wall Street’s biggest banks as the collapse of two mid-sized lenders in March sent shockwaves across the world and further fueled recession worries.
Profit applicable to the bank’s common shareholders for the three months ended Mar. 31 fell to $2.83 billion, or $1.70 per diluted share, the bank said on Wednesday. That compares to $3.54 billion, or $2.02 per diluted share, a year earlier.
(Reporting by Manya Saini and Niket Nishant in Bengaluru and Tatiana Bautzer in New York; Editing by Arun Koyyur)
